Factors affecting tender price in the Ghanaian construction industry

Kissi, Ernest; Adjei-Kumi, Theophilus; Badu, Eric; Boateng, Emmanuel B.

doi:10.1108/jfmpc-09-2016-0044

Cited by 31 publications

(24 citation statements)

References 46 publications

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“…These experts have long-standing experience in the field of quantity surveying and have undertaken several pre-qualification activities. These experts were to ascertain the reasonableness and completeness of the identified variables (Kissi et al , 2017). On this basis, a variable can be deleted or added to the list.…”

Section: Methodsmentioning

confidence: 99%

Ascertaining the impact of contractors pre-qualification criteria on project success criteria

Acheamfour

Kissi

Adjei-Kumi

2019

ECAM

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Purpose The selection of a suitable contractor for a project has a significant impact on project success. In order to avoid the selection of an incapable contractor, the capabilities of contractors must be assessed prior to tendering through pre-qualification. However, the pre-qualification process is characterized by partiality and ambiguity. In view of this, numerous models have been developed to solve the pre-qualification problems. Prior to the development of such models, it is very important to assess how the pre-qualification criteria impact project success criteria so as to aid in the selection of pre-qualification criteria while considering the project and client’s objectives. Therefore, the purpose of this paper is to ascertain the relationship between contractors’ pre-qualification criteria and project success criteria. Design/methodology/approach The study utilized explanatory research design in testing 35 hypotheses. The views of 121 practising quantity surveyors were solicited using a structured questionnaire and analyzed using the partial least square structural equation modeling to validate the hypothesis. Findings In all, 13 of the 35 hypotheses were not supported. The findings indicated a clear relationship between contractors’ pre-qualification and project success. Practical implications Therefore, it is evident that the practice of lowest evaluate bidder is not adequate for providing a satisfactory project outcome. It is, therefore, suggested that more emphasis should be placed on contractor’s technical abilities, health and safety and management capabilities as they have proven to have a significant correlation with the project success. Originality/value This study provides insights to the how various pre-qualification criteria can impact the project success criteria and further contributes to the symbiotic that exist in the literature on pre-qualification and project success.

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Section: Methodsmentioning

confidence: 99%

Ascertaining the impact of contractors pre-qualification criteria on project success criteria

Acheamfour

Kissi

Adjei-Kumi

2019

ECAM

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“…Their results showed that price increase including material cost escalation is one of the ten major cost overrun factors. Kissi et al (2017) examined the factors that affect price estimation in the tender stage of construction projects using least square-structural model (PLS-SEM). Barraza and Bueno (2007) offered a simple heuristic approach to manage cost contingencies in construction projects using Monte Carlo simulation.…”

Section: Literature Reviewmentioning

confidence: 99%

Price risk management in BOT railroad construction projects using financial derivatives

Vahdatmanesh¹,

Firouzi

2018

JFMPC

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Purpose Railroad transit infrastructures are amongst major capital-intensive projects worldwide, which impose significant risks to the contractors of build-operate-transfer projects because of the fluctuations in steel price fluctuation. The purpose of this paper is to introduce a methodology for hedging steel price risk using financial derivatives. Design/methodology/approach Cox–Ross valuation lattice has been used as an option valuation model for determining option’s price for the construction companies involved in fixed-price railroad projects. A sensitivity analysis has been conducted using the financial option Greeks to evaluate the impacts of option’s pricing factors in the total price of option. Findings The result of valuation shows that European options cost to safeguard against the effects of price risk is only a fraction in contrast to the total cost of steel procurement for a typical railroad construction company. This confirms that using this kind of financial derivative is a beneficial yet effective approach for hedging steel price risk for railroad construction companies. Practical implications The applicability of the financial derivatives, both exchange-traded and over-the-counter instruments, is evident in broad financial industry. This paper shows how European options can be readily used for risk management of a typical railroad project, and explains the methodology in a step-by-step procedure. Originality/value Although the financial engineering literature is rife of theory and application of derivatives in various contexts, to the best knowledge of authors there is only few papers on the application of these well-developed financial instruments for risk management in construction industry. This study intends to illustrate how financial derivatives can add value to risky construction projects and shed new light in this important application area.

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“…The trend lines, which are used the most during the design of the extrapolation forecasts (prognosis), contain two or three parameters. Based on the significance of the estimation of the parameters of the trend line, a second-degree polynomial has been chosen [11].…”

Section: The Methods Of the Price Development Forecast Based On The Anmentioning

confidence: 99%

“…In conclusion, the authors highlight the need for consultation and expert discussion using any statistical method used to predict an offer in the construction sector. In the construction practice, those statistical methods may also have a practical use, especially during the design of the tender price from the contractor's point of view, in his company's pricing policy [11].…”

Section: Literature Researchmentioning

confidence: 99%

Statistical Methods in Building Industry to Determine Prices Indices

Ellingerová

Petráková

Skalíková

2020

Teh. glas. (Online)

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Tender price is often affected by the location of the construction, which is usually determined by the investor, and it has an impact on the traffic in the particular location. Individual time of supply and the method of realization play an important role as well. They both are determined by the investor along with the designer of the particular construction. Contractors often complain about the lack of time needed for the preparation of their tender prices. Therefore, it is necessary to look for the possibilities how to reliably speed up this process at the same time taking into account all of the specific features of a structure. This article deals with the application of two statistical methods. The Pareto analysis, which can be used during the design of the tender price, and the extrapolation method, which can be used for the estimation of the price development, based on the regression analysis of the time series. The results of the article particularly serve to contractors in the building industry to better prepare their price offers in tenders. The findings of this document may also be applicable in other countries which have a similar economic profile as Slovakia.

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Factors affecting tender price in the Ghanaian construction industry

Cited by 31 publications

References 46 publications

Ascertaining the impact of contractors pre-qualification criteria on project success criteria

Ascertaining the impact of contractors pre-qualification criteria on project success criteria

Price risk management in BOT railroad construction projects using financial derivatives

Statistical Methods in Building Industry to Determine Prices Indices

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